Daily Price Outlook

The USD/JPY currency pair has sustained its upward trend, attracting additional bids above the 143.50 level. The driving force behind this upward movement can be attributed to the devastating earthquake in central Japan, which is perceived as a significant factor undermining the domestic currency. This, coupled with the ongoing recovery of the US Dollar (USD) from a multi-month low, supported by a further increase in US Treasury bond yields, is strengthening the USD/JPY pair.

On the flip side, concerns about a potential escalation of geopolitical tensions in the Middle East and a sluggish economic recovery in China are dampening investor sentiment. This is evident in the generally weaker tone observed in equity markets. Additionally, the growing conviction that the Bank of Japan (BoJ) may deviate from its ultra-loose policy settings is providing support to the safe-haven Japanese Yen (JPY).

Meanwhile, the Japanese Yen (JPY) is expected to avoid substantial losses due to anticipated changes in the Bank of Japan's (BoJ) policy. This shift is likely to happen around April following March's annual wage negotiations, with the possibility of an earlier move in January. In contrast, the Federal Reserve (Fed) is projected to carry out a series of interest rate cuts in 2024, possibly commencing as early as March. This could curtail the rise in US bond yields and the strength of the US Dollar (USD).

Traders Exercise Caution Ahead of NFP Report, Eyeing Economic Indicators for Insight

Looking forward, traders are cautious about making big bets and are waiting for clarity on the Federal Reserve's future policies. The focus is on Friday's release of the Nonfarm Payrolls (NFP) report for insights. Traders are closely monitoring these indicators to gauge the job market and anticipate potential market moves.

USDJPY Pair Gains Amid Yen Weakening and Policy Divergence Expectations

Furthermore, the Japanese Yen experienced a weakening trend against the US Dollar, influenced by various factors, including the seventh consecutive contraction in the au Jibun Bank Japan Manufacturing PMI, which plummeted to a low of 47.9 in December. Despite this, the Yen finds some support from expectations of a shift in policy alignment between the Bank of Japan (BoJ) and the Federal Reserve (Fed) in 2024.

The recently released FOMC minutes indicated consensus on maintaining controlled inflation, although they lacked clear indications of potential rate cuts, thereby supporting US bond yields and the Dollar. In the US, the ISM Manufacturing PMI showed a slight improvement, and job listings dropped to 8.79 million in November. Investors are eagerly anticipating the US ADP report and the pivotal Nonfarm Payrolls (NFP) report scheduled for release on Friday.

Therefore, the USDJPY pair experienced gains as the Japanese Yen declined against the US Dollar. Factors include poor Japan Manufacturing PMI, expectations of policy divergence, and the FOMC minutes favoring the Dollar.

USD/JPY - Technical Analysis

The USD/JPY pair exhibits a bullish trend on Thursday, January 4, as it trades at 143.226, marking a 0.25% increase. The currency pair faces significant technical levels, with the pivot point at 141.43. Immediate resistance is observed at 142.52, followed by higher levels at 143.97 and 145.16.

In contrast, support lies at 139.94, 138.74, and 137.35. The Relative Strength Index (RSI) at 67 suggests bullish sentiment, nearing overbought conditions. The MACD at 0.2380 signals upward momentum, indicating potential bullish trends.

The pair's position above the 50-Day EMA of 142.97 further supports the current bullish outlook. However, traders should monitor key resistance levels for signs of a reversal or continued bullish trend.

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Daily Price Outlook

- USD/JPY trades at 141.270, facing immediate resistance at 141.22 and higher levels at 143.09 and 144.31.

- Bearish trend indicated by trading below the 50 EMA of 141.96, but oversold RSI at 30 hints at potential rebound.

- Short-term outlook suggests a bearish trend; traders may consider strategic entry points for potential reversals.

The USD/JPY currency pair, a pivotal player in the forex market, is currently experiencing some downward movement. As of December 28, the pair is trading at 141.270, marking a decline of 0.39%. This movement provides a deeper insight into the pair's current position and potential future trajectory.

The pair finds its immediate resistance at 141.22, with subsequent resistance levels at 143.09 and 144.31. These levels are crucial in determining the pair's ability to rebound and push higher. Conversely, the immediate support for USD/JPY is stationed at 139.96, followed by further support at 138.09 and 136.35. These support levels will be key in preventing further declines.

The Relative Strength Index (RSI) for USD/JPY is at 30, indicating that the pair is currently in the oversold territory. This suggests that there might be a potential for a rebound as the pair could be undervalued at these levels. The Moving Average Convergence Divergence (MACD) stands at -0.09, which is below its signal line at -0.31, hinting at potential downward pressure. However, the pair is currently trading below its 50-Day Exponential Moving Average (EMA) of 141.96, suggesting a bearish trend in the short term.

In summary, the USD/JPY pair's current market trend leans towards a bearish sentiment. However, considering the oversold condition indicated by the RSI, there could be potential for a rebound. Traders might consider a buy limit entry at 141.011, with a take-profit target at 142.330 and a stop-loss at 140.190, expecting the pair to test these resistance levels in the upcoming days.

USD/JPY - Trade Ideas

Entry Price – Buy Limit 141.011

Take Profit – 142.330

Stop Loss – 140.190

Risk to Reward – 1: 6

Profit & Loss Per Standard Lot = +$1319/ -$821

Profit & Loss Per Mini Lot = +$131/ -$82

Daily Price Outlook

The USD/JPY pair continues its downward trajectory, trading around 141.30 in the Asian session on Thursday. This decline is attributed to the release of improved Japanese trade data for November, which bolstered the Japanese Yen (JPY). Specifically, Japan’s Ministry of Economy, Trade and Industry reported a significant improvement in Retail Trade and Industrial Production, painting a more robust picture of the Japanese economy.

BoJ’s Cautious Stance on Policy Unwinding

Despite the positive economic data, remarks from Bank of Japan (BoJ) Governor Kazuo Ueda have introduced a cautious note. On Wednesday, Ueda emphasized the lack of urgency in unwinding the ultra-loose monetary policy, pointing to the low risk of inflation exceeding the 2% target. His comments suggest a continuation of the current accommodative policy, which could potentially weigh on the JPY in the near term.

Fed's Expected Rate Cuts Weakening the USD

Conversely, the US Dollar (USD) faces pressure from market expectations of Federal Reserve (Fed) rate cuts in early 2024. Following the Fed’s policy shift in December, speculation has grown around the possibility of up to three rate cuts by the end of 2024, amounting to a total of 75 basis points. This dovish pivot is contributing to the USD's weakening against the JPY.

US Manufacturing Data Influencing Market Sentiment

Adding to the complex market dynamics, the US Richmond Fed Manufacturing Index showed a sharper-than-expected decline in December. The 11-point drop, following a 5-point decrease in November, signals a contraction in manufacturing activity, which could influence market perceptions of the US economic condition. Investors are now poised to analyze the Initial Jobless Claims and Pending Home Sales data due on Thursday for further insights into the US economy's health.

Global Economic Landscape Impacting USD/JPY Movements

The interplay between Japan's economic resurgence and the Fed’s dovish stance creates a nuanced backdrop for the USD/JPY pair. As traders digest the latest economic data and central bank policies, the currency pair’s movements will be closely monitored. The combination of improved Japanese economic indicators and expectations of Fed rate cuts presents a challenging environment for market participants navigating the USD/JPY trajectory.

USD/JPY - Technical Analysis

The USD/JPY currency pair, a pivotal player in the forex market, is currently experiencing some downward movement. As of December 28, the pair is trading at 141.270, marking a decline of 0.39%. This movement provides a deeper insight into the pair's current position and potential future trajectory.

The pair finds its immediate resistance at 141.22, with subsequent resistance levels at 143.09 and 144.31. These levels are crucial in determining the pair's ability to rebound and push higher. Conversely, the immediate support for USD/JPY is stationed at 139.96, followed by further support at 138.09 and 136.35. These support levels will be key in preventing further declines.

The Relative Strength Index (RSI) for USD/JPY is at 30, indicating that the pair is currently in the oversold territory. This suggests that there might be a potential for a rebound as the pair could be undervalued at these levels. The Moving Average Convergence Divergence (MACD) stands at -0.09, which is below its signal line at -0.31, hinting at potential downward pressure. However, the pair is currently trading below its 50-Day Exponential Moving Average (EMA) of 141.96, suggesting a bearish trend in the short term.

In summary, the USD/JPY pair's current market trend leans towards a bearish sentiment. However, considering the oversold condition indicated by the RSI, there could be potential for a rebound. Traders might consider a buy limit entry at 141.011, with a take-profit target at 142.330 and a stop-loss at 140.190, expecting the pair to test these resistance levels in the upcoming days.

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Daily Price Outlook

- USD/JPY slides under the 143.00 mark, facing immediate resistance at 143.171.

- The RSI leans toward a bearish outlook, staying below the midpoint of 50.

- The pair's dip under the 50-day EMA suggests potential bearish momentum ahead.

The USD/JPY currency pair is presenting a subdued performance, recently dipping below the 143.00 psychological mark, and now trades at 142.939. This represents a modest retreat of 0.06% within a 24-hour window as observed in the 4-hour chart. Currently, the pair is grappling with a downward pressure that has nudged it beneath the 50-day Exponential Moving Average (EMA) pivot point of 143.827, potentially signaling a bearish shift in momentum.

Resistances lie overhead at 143.171 and a more pronounced one at 143.827, which coincides with the 50 EMA, followed by a stronger barrier at 144.936. To the downside, immediate support emerges at 141.009, with a further safety net at 138.977. The Relative Strength Index (RSI), a gauge of market sentiment, underscores this bearish inclination, registering at 44.69, below the neutral threshold of 50.

This technical configuration suggests the pair may be poised for further declines, with the current slip below the key EMA level reinforcing this outlook. Market participants are now closely monitoring these dynamics, with the potential for continued downward movement if bearish sentiment persists. Conversely, a recovery above the EMA could invalidate this bearish scenario, putting the aforementioned resistance levels back into play. In summary, the USD/JPY is at a technical crossroads, with its near-term trajectory hinging on its ability to either sustain below or recover above the 50-day EMA.

USD/JPY - Trade Idea 

Entry Price – Sell Limit 143.200

Take Profit – 141.436

Stop Loss – 144.242

Risk to Reward – 1: 1.6

Profit & Loss Per Standard Lot = +$1764/ -$1042

Profit & Loss Per Mini Lot = +$176/ -$104

Daily Price Outlook

The USD/JPY currency pair has struggled to stop its downward trajectory and continues to face selling pressure, hovering around the 143.00 level. However, this persistent decline can be attributed to a combination of factors, including a weakened US dollar, a more cautious risk sentiment in the market, and an upward adjustment of Japan's growth forecasts. These elements support the safe-haven appeal of the Japanese yen, contributing to the ongoing bearish trend in the USD/JPY pair.

Japanese Yen Strength Amidst Equities Weakness and BoJ's Ultra-Dovish Stance

It's important to highlight that the safe-haven Japanese Yen (JPY) is gaining strength due to a generally weaker tone in equity markets. This boost comes after the Japanese government increased its economic growth estimates. However, the Bank of Japan (BoJ) maintaining an ultra-dovish stance limits further JPY gains.

Meanwhile, the recent Wall Street slump also contributes to the USD/JPY pair facing pressure. Japan's Cabinet Office raised economic growth projections for fiscal 2023/24 to 1.6%, and for 2024/25 to 1.3%. Despite these positive signs, the BoJ's commitment to a loose monetary policy, which tend to undermine the JPY currency and may help the USD/JPY pair to limit its deeper losses.

Factors Influencing US Dollar Strength Amidst Federal Reserve Uncertainty and Positive Economic Data

Furthermore, the US Dollar is getting some support due to uncertainty about when the Federal Reserve will start easing, especially after positive US economic data on Wednesday. Despite talk from influential Fed officials downplaying a shift from their hawkish stance, the US Consumer Confidence Index saw a significant rise in December.

Surprisingly, Existing Home Sales in November went up by 0.8%, breaking a five-month decline trend. Investors are still anticipating a potential early interest rate cut in 2024, leading to lower US bond yields and limiting the strength of the Greenback. The focus now shifts to key economic indicators, including the final US Q3 GDP, Weekly Jobless Claims, and the Philly Fed Manufacturing Index.

Therefore, the uncertainty around the Federal Reserve's easing timeline and positive US economic data provide some support for the US Dollar. This, coupled with the potential for an early interest rate cut, may limit USD/JPY pair strength.

USD/JPY - Technical Analysis

The USD/JPY currency pair is presenting a subdued performance, recently dipping below the 143.00 psychological mark, and now trades at 142.939. This represents a modest retreat of 0.06% within a 24-hour window as observed in the 4-hour chart. Currently, the pair is grappling with a downward pressure that has nudged it beneath the 50-day Exponential Moving Average (EMA) pivot point of 143.827, potentially signaling a bearish shift in momentum.

Resistances lie overhead at 143.171 and a more pronounced one at 143.827, which coincides with the 50 EMA, followed by a stronger barrier at 144.936. To the downside, immediate support emerges at 141.009, with a further safety net at 138.977. The Relative Strength Index (RSI), a gauge of market sentiment, underscores this bearish inclination, registering at 44.69, below the neutral threshold of 50.

This technical configuration suggests the pair may be poised for further declines, with the current slip below the key EMA level reinforcing this outlook. Market participants are now closely monitoring these dynamics, with the potential for continued downward movement if bearish sentiment persists. Conversely, a recovery above the EMA could invalidate this bearish scenario, putting the aforementioned resistance levels back into play. In summary, the USD/JPY is at a technical crossroads, with its near-term trajectory hinging on its ability to either sustain below or recover above the 50-day EMA.

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Daily Price Outlook

- USD/JPY dips to 141.767, down by 0.74%, testing key support levels.

- Oversold RSI conditions hint at a potential shift in market sentiment.

- Price action below the 50 EMA signals a bearish trend but faces pivotal resistance at 141.93.

The USD/JPY pair experienced a downward movement of 0.74%, settling at around 141.767. This decline marks a notable shift from recent sessions, with the pair now grappling with the pivotal 138.90 level, which stands as a significant pivot point in the current price dynamics. The chart suggests immediate resistance forming at 141.93, with subsequent barriers at 144.79 and 147.82. On the downside, the pair finds immediate support at 138.81, with further cushions at 135.86 and 133.19, which could be tested should the bearish trend continue.

Technical indicators display a bearish overtone, with the Relative Strength Index (RSI) deeply entrenched in oversold territory at 22, signaling potential exhaustion in selling pressure and the possibility of a reversal if market conditions permit. The Moving Average Convergence Divergence (MACD) stands at -0.373 with a signal line of -0.719, suggesting that downward momentum is waning, offering a glimmer of optimism for bulls in the market.

The pair's trading below the 50-day Exponential Moving Average (EMA) of 143.89 reinforces the short-term bearish trend. However, chart patterns and RSI levels warrant attention for signs of a potential correction or continuation of the trend.

While the USD/JPY pair shows a bearish trend in the short term, the oversold RSI indicates that a reversal could be imminent. Should the pair manage to recapture the 141 level, it could set the stage for a retest of the immediate resistance at 141.93. Investors will closely monitor the pair for signs of stabilization or further decline, as the currency navigates through key technical junctures in the days ahead.

USD/JPY - Trade Idea 

Entry Price – Buy Limit 141.074

Take Profit – 143.232

Stop Loss – 139.465

Risk to Reward – 1: 1.3

Profit & Loss Per Standard Lot = +$215/ -$160

Profit & Loss Per Mini Lot = +$21/ -$16 (edited)

Daily Price Outlook

The USD/JPY pair bounced back from its recent low near 141.00 as the Japanese Yen trimmed some of its gains against the US Dollar. However, this recovery was mainly influenced by a positive market sentiment driven by the Federal Reserve's dovish stance and expectations of additional stimulus from China. Furthermore, there is a growing belief that the Bank of Japan (BoJ) might end its negative interest rate policy sooner than expected, contributing to the Yen's support and may limit gains in the USD/JPY pair.

Positive Market Mood and the USD/JPY Pair's Resurgence

As we mentioned above that the major factor influencing the USD/JPY pair is the positive market mood, thanks to the Federal Reserve's more relaxed approach. It should be noted that Fed recently decided to stop raising interest rates by the end of December and hinted at possible rate cuts in 2024. This move has caused a drop in US Treasury bond yields.

Consequently, the interest rate difference between the US and Japan has decreased, making it tougher for the Japanese Yen to gain strength. This shift in dynamics is helping the USD/JPY pair's comeback.

Moreover, optimism about extra support from China is boosting the positive market sentiment, making the Japanese Yen less attractive as a safe-haven and contributing the gains in the USD/JPY pair.

Factors Affecting the Japanese Yen and USD/JPY Pair

Another factor influencing the strength of the Japanese Yen is speculation regarding the actions of the Bank of Japan (BoJ). There is considerable discussion about the potential for the BoJ to discontinue negative interest rates sooner than anticipated, possibly even before the outcomes of crucial employment negotiations at major corporations are known. This potential shift in policy is contributing to the appreciation of the Japanese Yen.

Economically, Japan's Machinery Orders data, which is a key indicator of capital spending, surpassed expectations by increasing by 0.7% in October. On the political front, Prime Minister Fumio Kishida's cabinet reshuffle amid a financial investigation highlights the challenges in Japan's political landscape.

Therefore, the speculation about the Bank of Japan's policy shift and positive economic data boost the Japanese Yen, likely causing a decline in the USD/JPY currency pair. Political challenges add to the mix, influencing exchange rates.

Looking ahead, traders are watching for monetary policy updates from major central banks in Europe, which could offer short-term opportunities. Furthermore, the upcoming US monthly Retail Sales data, expected to decline for the second successive month by 0.1% in November, will likely influence the USD/JPY pair's trajectory.

USD/JPY - Technical Analysis

The USD/JPY pair experienced a downward movement of 0.74%, settling at around 141.767. This decline marks a notable shift from recent sessions, with the pair now grappling with the pivotal 138.90 level, which stands as a significant pivot point in the current price dynamics. The chart suggests immediate resistance forming at 141.93, with subsequent barriers at 144.79 and 147.82. On the downside, the pair finds immediate support at 138.81, with further cushions at 135.86 and 133.19, which could be tested should the bearish trend continue.

Technical indicators display a bearish overtone, with the Relative Strength Index (RSI) deeply entrenched in oversold territory at 22, signaling potential exhaustion in selling pressure and the possibility of a reversal if market conditions permit. The Moving Average Convergence Divergence (MACD) stands at -0.373 with a signal line of -0.719, suggesting that downward momentum is waning, offering a glimmer of optimism for bulls in the market.

The pair's trading below the 50-day Exponential Moving Average (EMA) of 143.89 reinforces the short-term bearish trend. However, chart patterns and RSI levels warrant attention for signs of a potential correction or continuation of the trend.

While the USD/JPY pair shows a bearish trend in the short term, the oversold RSI indicates that a reversal could be imminent. Should the pair manage to recapture the 141 level, it could set the stage for a retest of the immediate resistance at 141.93. Investors will closely monitor the pair for signs of stabilization or further decline, as the currency navigates through key technical junctures in the days ahead.

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Daily Price Outlook

During the European trading session, the USD/JPY currency pair failed to stop its downtrend, losing further ground as the Japanese Yen (JPY) gained aggressive bids on Thursday. It surged to a three-month high against the US Dollar amidst growing expectations of a shift in the Bank of Japan's (BoJ) policy stance.

BoJ Governor Kazuo Ueda discussed monetary policy, mentioning considerations for wage hikes during a meeting with Japanese Prime Minister Fumio Kishida. This has led to speculation that the BoJ might think about moving away from its long-standing monetary stimulus, given the prospect of significant wage increases for the second year in a row.

Fed Rate Hike Expectations, Job Market Concerns, and Data Ahead

Meanwhile, the Japanese Yen is gaining strength as stock markets weaken, thanks to its safe-haven reputation. Furthermore, the broad-based US dollar is losing ground, bringing the USD/JPY pair to its lowest level since September, dropping below 146.00. Traders are watching the US Weekly Initial Jobless Claims data for potential market impact later in the North American session.

It's worth noting that many expected the Federal Reserve to stop raising interest rates in 2024 as concerns about a slowing economy are rising as signs of a loosening US job market emerge. The US Labor Department reported a 617K decline in job openings to 8.73 million in October, the lowest in two-and-a-half years.

The ADP report revealed a modest 103K job addition in November, reinforcing expectations of a Federal Reserve policy shift and a possible 25 basis points rate cut in March.

Potential Impact on USD/JPY Pair Amidst Gaza Conflict and China Economic Concerns

Moreover, Israeli forces intensified ground operations in southern Gaza, escalating combat against Hamas militants and worsening the humanitarian crisis. Meanwhile, China's mixed Trade Balance data for November revealed an unexpected 0.6% decline in imports, sparking concerns about weak domestic demand amid recession risks.

Therefore, the intensified conflict in Gaza and concerns about China's economic slowdown may lead to increased safe-haven demand for the Japanese Yen, potentially strengthening it against the US Dollar.

USD/JPY - Technical Analysis

As of December 7, the USD/JPY pair has witnessed a downward shift, decreasing by 0.38% to 146.712. The currency pair, within the context of a fluctuating forex market, is currently grappling with key technical levels that will determine its short-term trajectory. It navigates around a pivotal point at 144.72, with immediate resistance placed at 145.75. Subsequent resistance levels are seen at 147.75 and 148.84, posing potential hurdles to upward movements. On the downside, immediate support is established at 142.71, followed by stronger support levels at 140.82 and 138.76.

The Relative Strength Index (RSI) for USD/JPY is at 41, indicating a bearish sentiment as it remains below the neutral mark of 50. This suggests the pair is not in an overbought state, leaving scope for potential directional changes. The Moving Average Convergence Divergence (MACD) shows a slight positive value of 0.02 against a signal line of -0.14, hinting at a subdued bullish momentum.

Notably, the pair is trading below the 50-day Exponential Moving Average (EMA) of 147.06, further underscoring the bearish bias. The observed downward trendline, extending resistance at 147.350, suggests a continuation of this trend. This pattern indicates that the pair could maintain its bearish stance unless it breaches the 147.350 level.

In conclusion, the technical analysis of the USD/JPY pair points to a bearish trend below the 147.350 mark in the short term. The pair's movements will likely be influenced by a combination of technical indicators, chart patterns, and broader market sentiment, focusing on resistance testing if there is a shift in market dynamics.

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Daily Price Outlook

- USD/JPY experiences a decline to 146.712, facing resistance up to 148.84 and support down to 138.76.

- RSI at 41 and MACD slightly positive, indicating a current bearish sentiment.

- Pair trades below the 50-day EMA, with a bearish outlook reinforced by a downward trendline resistance pattern.

As of December 7, the USD/JPY pair has witnessed a downward shift, decreasing by 0.38% to 146.712. The currency pair, within the context of a fluctuating forex market, is currently grappling with key technical levels that will determine its short-term trajectory. It navigates around a pivotal point at 144.72, with immediate resistance placed at 145.75. Subsequent resistance levels are seen at 147.75 and 148.84, posing potential hurdles to upward movements. On the downside, immediate support is established at 142.71, followed by stronger support levels at 140.82 and 138.76.

The Relative Strength Index (RSI) for USD/JPY is at 41, indicating a bearish sentiment as it remains below the neutral mark of 50. This suggests the pair is not in an overbought state, leaving scope for potential directional changes. The Moving Average Convergence Divergence (MACD) shows a slight positive value of 0.02 against a signal line of -0.14, hinting at a subdued bullish momentum.

Notably, the pair is trading below the 50-day Exponential Moving Average (EMA) of 147.06, further underscoring the bearish bias. The observed downward trendline, extending resistance at 147.350, suggests a continuation of this trend. This pattern indicates that the pair could maintain its bearish stance unless it breaches the 147.350 level.

In conclusion, the technical analysis of the USD/JPY pair points to a bearish trend below the 147.350 mark in the short term. The pair's movements will likely be influenced by a combination of technical indicators, chart patterns, and broader market sentiment, focusing on resistance testing if there is a shift in market dynamics.

USD/JPY - Trade Ideas

Entry Price – Sell Below 147.33

Take Profit – 145.869

Stop Loss – 148.132

Risk to Reward – 1: 1.8

Profit & Loss Per Standard Lot = +$1462/ -$801

Profit & Loss Per Mini Lot = +$146/ -$80

Daily Price Outlook

The Japanese Yen (JPY) continues to exhibit strength against the US Dollar (USD) for the fifth consecutive day, despite the Bank of Japan (BoJ)'s less hawkish stance, as indicated by recent comments from BoJ officials. BoJ board member Seiji Adachi emphasized on Wednesday that Japan's economy is not yet at a stage to consider exiting its ultra-easy monetary policy. This sentiment was echoed on Thursday by BoJ policymaker Toyoaki Nakamura, who noted the absence of sustained, stable 2% inflation and wage growth.

Investors seem to anticipate a shift from the BoJ's dovish policy, a sentiment that, combined with a weaker risk appetite, supports the JPY. This investor sentiment is further influenced by the disappointing Chinese PMI figures for November, reflecting concerns about the health of the world's second-largest economy. Concurrently, the USD is facing pressure, reflected in the USD/JPY pair trading near a three-month low as the European session commences on Thursday.

The USD Index (DXY) struggles to build on its overnight recovery, hindered by the consensus that US interest rates have reached their peak. Market expectations of the Federal Reserve (Fed) potentially easing its monetary policy as early as March 2024 have resulted in a decline in US Treasury bond yields, further challenging the USD. These factors suggest a downward trajectory for the USD/JPY pair, with the upcoming US PCE Price Index release being the next focal point for traders.

Despite the BoJ's recent less hawkish comments, the expectation of a shift in the bank's stance lends support to the JPY. Adachi's remarks about Japan not yet seeing a positive wage-inflation cycle and the BoJ's readiness for additional easing measures suggest a cautious approach to policy normalization. Similarly, Nakamura's comments underline the need for patience in maintaining the current easing policy.

The Japanese economy shows mixed signals, with Retail Trade in October declining by 1.6% month-on-month but registering a 4.2% year-on-year growth, an upward revision from the previous month. The Industrial Production in Japan also exceeded expectations, recording a 1% increase in October compared to September and a 0.9% year-on-year growth.

In contrast, the US economy reported a stronger-than-anticipated growth, with a 5.2% annualized increase in GDP for the third quarter. However, the impact of this positive data was somewhat offset by dovish signals from Federal Reserve officials, indicating a likelihood of rate cuts in 2024. Cleveland Fed President Loretta Mester acknowledged progress in achieving a 2% inflation rate, while Richmond Fed President Tom Barkin expressed concerns about persistent inflation.

The speculation in the US rates futures markets about more than 100 basis points of rate cuts starting in May 2024, coupled with the lowest yield on the two-year US government bond since July, keeps USD bulls cautious. This backdrop sets a bearish tone for the USD/JPY pair ahead of the release of the US PCE Price Index.

USD/JPY - Technical Analysis

In the currency markets today, the USD/JPY pair has seen a slight decline, down by 0.12% to 147.03, reflecting a tentative bearish sentiment among traders. This minor dip may be an indicator of a broader hesitation within the market as investors grapple with the pair’s recent volatility.

The pair is currently trading around a pivot point of 145.98, indicating potential shifts in market direction. The immediate resistance is seen at 147.80, with further barriers at 148.83 and a significant resistance at 150.54. On the downside, immediate support lies at 144.90, with additional supports placed at 143.81 and 142.67, which could stabilize any further downward movement.

Technical indicators suggest a bearish inclination with the RSI at 34, indicating that the pair is nearing oversold conditions, which could presage a potential bounce back if buying interest is triggered. The price sitting below the 50-Day EMA of 147.38 further solidifies the current bearish bias.

Chart patterns do not present a clear narrative, but the price below the 50 EMA and the pivot suggests a bearish undertone may persist in the short term.

The overall technical perspective for the USD/JPY pair is bearish as long as it remains below 147.72. The immediate expectation is for the pair to potentially test and react to the identified resistance levels in the near future.

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